Sometimes, the Best Way to Fight Auto Finance Fraud Is the Old-Fashioned Way
Extra! Extra! Read all about it! Fraud flood finds financiers floundering! Portfolio performance poised to plummet! Circumspect lenders spending lots on loss prevention tech!
For some reason, I can’t help but hear an old-timely newsie in my head whenever I read about consumer lending fraud. Perhaps it’s because in an industry as sophisticated as auto finance, fraud seems like a particularly old-fashioned problem. Despite their use of advanced tactics such as synthetic identity theft and machine learning, fraudsters are still essentially ordinary criminals trying to deceive others for financial gain.
Accordingly, as the rates and costs of fraud escalate, lenders are finding out that sometimes the best way to fight back is with an old-fashioned tool: field contact services. That’s according to Spinnaker Consulting Group director Joel Kennedy, who recently authored a great piece in SubPrime Auto Finance News about the “strong results” this traditional fraud mitigation solution delivers. He writes:
“Seeing is believing, and nothing beats an actual physical verification when it comes to a lender’s collateral. There is no fraud mitigation tool more powerful than field contact services. I have used field contact services to identify possible fraud with vendors, borrowers, and collateral.”
Kennedy goes on to list the many benefits of field contact services, including their utility in “inspection of new dealers or recovery agents for purposes of third party vendor compliance management,” and “verifying the health of the facility before doing business or during the course of doing business (routine inspections),” as well as the fact that they can “be helpful at gathering additional information on your borrower, such as that your borrower has relocated.”
In other words, people out in the field not only keep business partners accountable, but ensure lenders stay connected to the consumers they serve. Kennedy explains:
“In today’s world of mobile enablement, sending an actual person out in the field to deliver a message may seem outdated. I can tell you that this is not the case. While our specific process changed over time, we routinely sent field calls on accounts that were 45-60 days past due, and on accounts where we had no recent contact or promise to pay on the books. I found that customers within this population responded to field calls, generating contacts (inbound calls) approximately a third of the time—making it an expense that was worthwhile.”
Read “Kennedy: Why aren’t finance companies using traditional methods to fight fraud?”
Make no mistake: while technology can’t replace in-person meetings, neither should lenders completely forgo modern fraud prevention tools. The most effective approach is to use technology and field contact services in tandem. Compligo makes it easy to ensure compliance and deliver news between your office and field examiners—no newsboy caps required. Learn more.
